Exam 8: Managing Your Credit

Credit cards are generally used for such purchases as

It is good financial planning to pay only the minimum credit card payment and thus maintain a balance since interest rates are low on credit cards.

To properly manage your money you should use a credit card only if you will have the cash to cover the payment when you receive your credit card statement.

Suppose you have a credit card balance of $500 that you were unable to pay off.During the current month you purchase another $250 worth of products.You made a payment during the grace period of $300.Assuming your retail credit card company charges an annual interest rate of 22%,compute your new balance.

The annual percentage rate (APR)on credit is the simple interest rate after including any fees (such as an application processing fee)imposed by the creditor.

Ben owes $3500 on his credit card which bears an interest rate of 1.5% per month or 19.6% per year.Since Ben is maxed out on his credit limit he is no longer charging anything to the card,but is only making the required monthly minimum payment which is 1.25% of the outstanding balance.How much of Ben's next payment will go towards paying off the outstanding balance?

A self-imposed credit limit indicates that you will use a credit card only if you will have the cash to cover the payment when you receive your credit card statement.

If it takes you four years to pay off a loan,you have to pay the total annual interest four times.

MasterCard and Visa credit cards are not accepted by gas stations such as Shell,which issue their own credit cards.

Which of the following is not true about annual fees on credit cards?

If a credit card has a provision allowing you to make purchases beyond the stated credit limit for a fee,it is referred to as

Cash advances on credit cards normally cost you interest from the date of the advance and also a transaction fee of 1 to 2 %.

Some credit cards offer card users cash rewards if they exceed a certain spending level each month.

Financial institutions issuing MasterCard and Visa credit cards typically charge a high rate of interest on the credit extended.

The interest you pay when using credit cards can have a major impact on the total amount you owe.

A credit card statement lists purchases that were made with the credit card as well as any balance carried forward from the previous statement.

It is not difficult to find a credit card company that is eager to extend credit to you.

If you include all fees charged by a lender and the simple interest rate,the result will be the ________.

If you borrowed $8,700 at 6% for one year,what would your total interest be if you are charged simple interest?

Credit limits may be as high as $10,000 for those credit card holders who have an exceptional credit history.